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Originally Posted by Leeman4Gilmour
$60MM cut out of a ~$4B operating budget. Negligible in the grand scheme of things.
$275MM from the capital budget. Some of that $275 was already there from cost under runs on other projects, iirc. Capital and operating are different animals. This particular capital project (unlike a road) will generate revenue. Which, I suppose, could be allocated to operating budget in the future. Or more capital projects.
Could the city have reallocated some of that $275MM to operating and not built the event center? Probably/Maybe. But, it’s not sound business practice to minimize investment/growth just “to keep the lights on”.
It’s all normal, just terrible timing and optics.
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While I'm happy to see the city approve the arena, I have found some of the messages about the deal interesting, specifically the whole capital vs. operating expenditure thing. Capex can certainly get reallocated to opex, so the city absolutely could have avoided a $60M cut by taking money from their capital budget.
Capital expenditures also eventually create ongoing operating expenses, although it sounds like the city will have zero responsibility for the building's operating expenses.